Precious Metals Blog

APM Precious Metals Blog

How much dirt does it take to produce one ounce of gold? What is the most liquid form of gold bullion? For these and other interesting facts about gold, watch the following APM Gold Presentation. When it comes to purchasing gold the best advice is – Keep it Simple and Only Purchase from Someone You Trust.

As a wise man once said – “If you always do what you’ve always done you’ll always get what you’ve always gotten” and as the Buddhist saying goes – “When the student is ready, the teacher appears”, so it is that the following four part series is offered for those desiring to take an intellectual interest in physical gold bullion. An interest that may perhaps lead you on a path to changing some of what you have always done.

Dependent upon the influence of the Ron Paul wing of the Republican Party, here is something to look for over the next three – to twelve months that if it happens could spark a significant rally in the price of gold – legislation allowing for competing currencies. That is – legislation to allow other forms of currency to compete with the paper US Dollar Federal Reserve Note. Should competing currencies legislation actually become law the most likely competing currency to emerge is gold bullion. Even if legislation allowing for competing currencies is not introduced it is still very important for all savers to understand the concept of competing currencies as such a movement could emerge outside of the legislative process (more on this later).

Competing Currencies Could Result in Hyperbolic Increase in the Price of Gold

Currently only a very small percentage of the American public – perhaps less than one percent, actually own gold bullion coins or bars. Now just imagine the increase in demand for gold if it is allowed to compete side by side with paper money as a competing currency. Assuming one percent of the public is currently in the market buying gold, a five fold increase in demand for gold would result if just five percent of the public starts to buy gold. It is impossible to accurately predict the price of gold with a five fold increase in demand but the laws of supply and demand would say with certainty that the rise in the price of gold under these circumstances would be significant. And if ten, fifteen or twenty percent of the public starts to take an interest in buying gold, the price of gold could go hyperbolic.

Gold and Silver as “Off the Record” Competing Currencies

Competing currencies can emerge in one of two ways – voluntarily via legislation calling for elimination of current legal tender laws such that gold and silver can also be used as money at current market value (e.g. $1650/$30 an ounce); or involuntarily should the public become so concerned about the devaluation of federal reserve notes that they hold onto them only long enough until they can trade them for a better storehouse of value – e.g. gold, silver, real estate etc. It is the view of this writer that as the sovereign debt crisis worsens and ultimately leads to concern over the long term survival of USD federal reserve notes, gold and silver will emerge as “off the record” competing currencies. In fact, gold and silver will emerge as a common and preferred form of savings as more and more savers convert their paper money savings into physical gold and silver bullion coins and bars.

Competing Currencies and Those Left Holding the Bag

Here’s something else to keep in mind as you ponder the purchase of gold and silver – ultimately, all debts are paid. Early movers to gold will be rewarded as later movers drive the price of gold substantially higher until such time as no one will sell their gold for paper. It is at this point where the final reconciliation of debt will take place – the paper dollar sovereign debt will be paid for by those holding the paper money that no one else wants – the paper money that is being created out of thin air even as you read this. You see, when paper money is created out of nothing to pay a paper money debt, those who hold it at the end when it becomes worthless are those who pay the debt. Pretty slick isn’t it?

As for legislation allowing for competing currencies, such as gold – unfortunately this is unlikely to happen. Why? Well, because to do so would force the politicians to face the reality that the gig is up as it will not take long for the public to catch on that the good money is the money that cannot be printed by the politicians and bankers in order to account for the debt that those left holding the paper money will pay. The best way to protect against the end game ending in disaster for you and your family is to convert some of your paper dollar savings (e.g. 10-25%) into physical gold bullion – sooner rather than later. What you do with the other portion of your savings is up to you and your financial adviser (of which I am not) – maybe you keep it in equities, maybe you buy some investment real estate property. The point is, the only asset class that has survived every historic calamity for the past 3000 years – wars, famines, revolutions and the rise and fall of empires, are the precious metals – gold and silver bullion. We are at the precipice of a period of time where, if you do not own this physical asset class, you are at risk.

Fractional Ounce Gold Coins – No one can predict with absolute certainty the future price of gold, however measuring the value of gold in units of the diminishing value of paper dollars strongly suggests that gold will rise in price. Also, given that at most only about 2% of the public owns physical gold bullion, a doubling of demand to just 4% of the public would send the price of gold spiraling higher. And if just 10% of the public starts bidding for gold – all bets are off – come up with your own projection.

Fractional Ounce Gold Coins Offer Greater Liquidity

Half Ounce American Gold Eagle

Point is, don’t overlook the value of adding fractional ounce gold coins to your physical gold holdings. Lets say as an example that gold reaches $4000/ounce and all your holdings are in ten ounce gold bars and you want to take $2000 from your gold holdings to buy the latest state of the art wide screen. Do you really want to cash out $40,000 worth of gold just to get $2000 in cash? Wouldn’t you like the option of owning some fractional ounce gold coins – lets say, ten half ounce American Gold Eagles? Also, should gold go to $4000/ounce, or higher, the demand for fractional ounce gold coins will likely be much greater at this price level than at the current price level – driving the premium over spot for fractional ounce gold coins much higher than it is today.

Call for Free Consultation on Fractional Ounce Gold Coins

Anyway – something to think about. Hope this offers a helpful perspective. Call for free consultation on how to increase the liquidity of your gold bullion holdings with fractional ounce gold coins.

Retirement Savings – The average annual rate of inflation in the decade of the 1970s was 7%. A repeat of this annual rate of inflation over the next five years means if you retire today with retirement savings of $500,000 your $500,000 would have the purchasing power of $356,493 in five years. In ten years your retirement savings of $500,000 would have the purchasing power of $254,174.

Gold Preserves the Purchasing Power of Retirement Savings

Contrary to the loss of purchasing power as described in the above paragraph, over long periods of time gold has served to preserve purchasing power. The preservation of retirement savings via ownership of gold is illustrated very succinctly in this article from the “Austrian Classroom”. As is illustrated in this article, when measured in terms of gold ounces, the price of a new car has actually gone down between 1913 and 2011.

Hold Some Retirement Savings in a Precious Medals IRA

If you have retirement savings and are expecting it to last over a long period of time, perhaps even by way of passing some of it on to your children and grandchildren, you should consider diversifying some of your retirement savings into physical gold bullion. In fact, you may want to consider taking some of your retirement savings from your traditional stocks, bonds and cash based IRA and transferring it to a precious metals IRA. You may not know it, but the IRS allows you to own gold and silver bullion in a precious metals IRA.

If you are interested in taking some of your long term savings – retirement savings or non retirement savings, and purchase gold and silver bullion for its 3000 year track record of purchasing power, give us a call and we will answer all of your questions and help you get started.

Gold Bullion refers to gold coins and bars whose value arises from the weight and purity of the gold used to produce them. Gold bullion is the purest and simplest way of owning and investing in physical gold. The American Gold Eagle and Canadian Gold Maple Leaf are examples of gold bullion coins. Here are five reasons to own gold bullion.

1. The US Dollar loses purchasing power every year. Since 1971 the USD has lost 82% of its value while an ounce of gold bullion, when converted to USD, will purchase as much as or more than it would purchase in 1971. Is there any reason to expect anything different in the next 40 years?

2. Gold bullion is recognized as having value in every country in the world and as such can be converted to the paper currency of any country. Ounces of gold bullion really are liquid assets around the globe.

3. Gold bullion cannot be mass produced by any person or organization, including governments, so its value cannot possibly be diluted by an over supply.

4. You cannot convert Gold ETF shares to physical gold bullion. You purchase Gold ETF shares with paper dollars and you sell Gold ETF shares for paper dollars. In short, the only way out of a Gold ETF is via paper money. You are not diversifying away from paper assets when you invest in a Gold ETF nor do you own gold bullion when you invest in a Gold ETF.

5. You, your family and future generations will never be poor if you own gold bullion and pass it on as part of your legacy. All paper assets eventually become worthless or are replaced by other paper assets that eventually become worthless. Among all of the physical assets, none have the long lasting physical durability of gold bullion. Gold bullion is virtually indestructible and does not deteriorate with age. A one ounce gold coin from the Roman empire still weighs one ounce today.

Waiting to Buy Gold Bullion is Risky

Knowledge is powerful if you act on it. Now is the time to purchase gold bullion. If you wait until everyone else understands the compelling reasons to own gold bullion it will be too late. By that time the cost of an ounce of gold bullion will be much higher than it is today and those who own it may not want to sell it for paper money at any price.

Buy Investment Grade Gold Bullion

There are a lot of gold products on the market today. What you want is investment grade gold bullion. That’s the only gold product we sell. Call us and we will help you get started.

Gold Money – Since starting this APM Precious Metals Blog last year I have uncovered an oddity – the task of writing about simple things in simple terms is not simple. Maybe this is because we make it unnecessarily that way. After all, when Yogi Berra described a restaurant as being “so crowded no one goes there anymore” we joke about it, but we get the idea – rather clearly. Now that the literacy standard for this Post has been set, let me try to explain the difference between paper money and gold money in a manner that is easy to understand.

Declining Purchasing Power of the USD

It strikes me that paper money can be described in simple terms as a promise made. The promise is basically this – at any point in the future you will be able to get something you need or want for it. After all, in and of itself, it has no value. It is merely a piece of paper with ink on it. In actuality a blank piece of paper would have more value because it could be used to make a grocery list or something of this sort. We do not think about it this way because we have always been able to use paper money in exchange for something we need or want. But nevertheless it is the promise that gives it value, not the paper dollar itself, for in reality the ink on the paper destroys the value of the paper in much the same way that a grocery list makes the paper it is written on useless for any other purpose.

The Value of Gold Precedes It’s Use as Gold Money

Tube of South African Gold Krugerrands

Now lets compare paper money with gold and gold money. First, lets address the question – why talk about gold money?, who cares? Well, unless one thinks history has absolutely no meaning, the simple fact is that since the beginning of so called “complex” or “modern” society some 5000 years ago (basically when our ancestors settled down from the hunting and gathering era), gold money has been the most common form of money. So, in terms of a promise, what is gold money? I think we can look at gold money as a promise kept in the sense that the value of gold precedes its use as gold money. Why is this so? Well, first of all gold is one of the rarest substances on earth. And it takes a lot of effort to find it, mine it and make it. Each step of the manufacturing process takes a lot of time and adds value to the production of the final product. If you do not think this is so, why does 14 carat gold jewelry have value? Much more value than carnival jewelry of the same design? Clearly it is the gold content that makes 14 carat jewelry so desirable and valuable. In this sense, gold money is a 24 carat form of jewelry. Gold money is the purest form of gold in the world. It is not a future promise of something. Gold money actually already is something. And what it is, has served as money 90% of the time over the past 5000 years.

The Paper Money State of Mine

Every other form of money – without exception, most notably paper with ink images, has had a very short life span. This current paper money era will not be the one exception. If you think otherwise, look at the chart above. A promise of something tangible in the future is not the same as something tangible now. All it takes is a lack of trust in the confidence of paper money to make it worthless. And that’s merely a state of mind. The state of mind that gives trust to paper money can change suddenly and rapidly. And this will happen. Only the timing is uncertain.

Think of Gold Money as a Higher Form of Gold Jewelry

If you are still uncertain about owning gold money in the form of pure physical gold bullion think of it as buying a much higher grade of gold jewelry. Why would you buy 10, 12 or 14 carat gold jewelry but have concern about owning gold money in the form of 24 carat pure gold coins and bars? If it is the gold content of jewelry that gives gold jewelry its value wouldn’t an item that is 100% gold rather than 30-50% gold be more valuable and reassuring to own?

The best time to buy gold money in the form of pure gold bullion coins and bars is when the masses still believe in the future promise of intrinsically valueless paper money. That state of mind can and will change. It is just a matter of time. If you have not yet diversified some of your paper assets into physical gold bullion gold money, call APM and we will help you get started. No customer is too small or too large and no question is bad unless it goes unasked. We look forward to helping you convert some of your paper assets into gold money.

Paper Currencies: What came first – money or real things? Easy answer – real things. How could it be otherwise? One farmer raises wheat and another farmer raises chickens. The two get together and trade wheat for chickens. Now they both have bread and chickens. Fine, but after a little while both farmers need to find a way to obtain candles from a candlestick maker who needs neither bread nor chickens. The three get together to come up with something that can be used to represent the value they attach to wheat, chickens and candles. This makes trading between the three so much easier. The substance that the three came up with to represent the value of wheat, chickens and candles is what we now call money. Clearly, real things preceded money and money only had value because it represented real things. If the number of real things stays the same but the substance being used as money doubles in supply, what would happen? Well, the measurement attached to real things would double. Total wealth would not increase because the number of real things has not increased even though twice as much money would be circulating to buy the same number of real things. In short – prices would go up – they would in fact double.

Paper Currencies and Counterfeiters

Now lets introduce a counterfeiter into the above scenario. Lets say the candlestick maker figured a way of creating more of the substance agreed to as money and did not tell the wheat farmer and the chicken farmer. What a deal – the candlestick maker starts using fake counterfeit money to buy as much wheat and chickens as he wants and he gets to buy them before the price rises as a result of his artificial expansion of the money supply.

STOP – If you understand the above two paragraphs you understand the cause of inflation (i.e. rising prices caused by an increase in the money supply), better than many Harvard educated economists. To fill in the blanks a little bit – the counterfeiter is the US government through its private banker, the Federal Reserve.

Now to the question – Why Paper Currencies Always Fail?

Simply stated, when money stops being real things or stops representing real things and instead takes the form of paper and ink (i.e. paper currencies), it is too easy for some party to cheat and create more money than there are real things. The plot thickens when the party asserting the power to introduce paper currencies is also the party who will benefit the most by being the first to spend newly created paper money before the prices rise for everyone else.

How Can They Get Away With This?

Easy – They are counting on the average person not being able to understand the system they devised.

Gold Storage – As people begin to seriously consider the movement of retirement and non-retirement savings into physical gold and silver bullion, one of the issues they immediately realize they need to address is – okay, I know I want to own gold and silver, but where do I store it? What are my gold storage options?

Gold Storage in Your House

Well, you can store gold and silver bullion somewhere in your house but you need to know most, if not all, homeowners insurance policies do not cover loss, damage or theft of bullion. So, you can use your house for gold storage but understand your risk. And please, whatever you do, if you decide to use your house for gold storage, don’t broadcast to people that you just bought $100,000 of gold and silver bullion. Not to be melodramatic but, although you may have found a secret hiding place in your home, if someone knows you have $100,000 of gold in your house and puts a gun to your head, you’re going to tell them where you hid it. If you use your home for gold storage, please, keep it to yourself.

Gold Storage in a Bank Safe Deposit Box

Another likely gold storage alternative is your bank’s safe deposit box. Not a bad idea, but again – understand your uninsured risk. Most banks limit their insurance on the contents of safe deposit boxes to $25,000 or less. Check with your bank for specifics. You also have an uninsured exposure while traveling to and from your bank with gold and silver bullion so keep this in mind as well.

Professional Gold Storage

If you prefer the services of a professional precious metals storage facility – Atlantic Precious Metals can help you arrange segregated and insured storage of all of your gold and silver bullion at an annualized cost of 60 basis point of the stored gold and silver market value. As an example, a gold and silver market value of $100,000 will cost you $600 a year for secure insured storage of your gold and silver bullion – probably the same amount or lower, as charged by your financial adviser for managing your fiat paper currency investments. By the way, if you select Atlantic Precious Metals as the dealer for your Precious Metals IRA we can arrange segregated and insured gold storage for 10 basis points (e.g. a gold and silver market value of $250,000 will only cost $250 a year for storage).

Again, the gold storage decision is your decision. But reasonably priced professional gold storage alternatives are available and APM will be glad to help you explore them. Call us anytime.

Like Carl Sandburg’s “little cat feet”, gold and silver bullion are beginning to quietly creep into the monetary system as people start to trade paper money for gold and silver money. Ironically, as the fog begins to lift, the early movers to gold are starting to come into view ……… and they are – are you ready for this? – the creators of paper money – the central banks around the world.

Gold – The Gold Standard of Money

Here is a simple fact for you to ponder – The world’s central banks bought 500% more gold in 2011 than they did in 2010. And what did they use to buy gold? They used the fiat paper money they created as a substitute for gold money? If you have doubts about the value of owning gold and silver – ask yourself this question – Why do all central banks (including the US Federal Reserve Bank), own gold bullion and why are they now starting to buy and own more gold bullion than they have at any time since the world went off of the gold standard in 1971? My conclusion is that they know that because they are expanding the paper money supply so much in order to finance growing sovereign debts, it is only a matter of time before paper money starts a rapid devaluation process and they want to own the most durable, portable and reliably scarce physical asset that the world has ever known before the rapid devaluation of paper money takes place. If you have a better explanation, please contact me and let me know.

Jesus throwing the money changers out of the temple

If the trend of central bank gold purchases continues where will this leave us? Well, the logical conclusion would seem to be that the bankers will own all of the gold and the general trusting public will own the devalued paper money. Wouldn’t it be ironic if this is the point (i.e. when the bankers own all of the gold), that the ruling class decides to go back to the gold standard where they measure an ounce of gold as being the equivalent of $5000. Stated differently – not a bad deal for the bankers if they end up buying all of the gold for an average price of $2500 an ounce and end up setting the value of gold at $5000 an ounce when we go back to the gold standard. The value of the bankers gold money doubles while the value of the public’s paper money goes down at least 50%.

Listen closely. As the fog recedes, the music is starting and the bankers are buying all of the chairs. This isn’t the time to be dancing.

The Gold Standard – Beat the Rush

If this concerns you – do as the bankers are doing, and start buying gold now, while you still can. The longer you wait, the more it will cost you and the less your paper money will be worth. Do it now. Before the music stops.

For the right gold bullion products at the right price, call 1-800-APM-GUIDE.